Dow Chemical 2015 Annual Report Download - page 109

99
Other Derivative Instruments
The Company utilizes futures, options and swap instruments that are effective as economic hedges of commodity price
exposures, but do not meet hedge accounting criteria for derivatives and hedging. At December 31, 2015 and 2014, the
Company had the following gross aggregate notionals of outstanding commodity contracts:
Commodity
Dec 31,
2015
Dec 31,
2014 Notional Volume Unit
Ethane — 0.2 million barrels
Gasoline — 15.0 kilotons
Naphtha Price Spread 15.0 91.0 kilotons
Natural Gas — 0.5 million million British thermal units
Propane 0.5 — million barrels
The Company also uses foreign exchange forward contracts, options and cross-currency swaps that are not designated as
hedging instruments primarily to manage foreign currency exposure. The Company had open foreign exchange contracts and
cross-currency swaps with various expiration dates to buy, sell or exchange foreign currencies with a gross notional U.S. dollar
equivalent of $14,515 million at December 31, 2015 ($20,156 million at December 31, 2014) and had no open interest rate
swaps at December 31, 2015 and December 31, 2014.
The following table provides the fair value and gross balance sheet classification of derivative instruments at December 31,
2015 and 2014:
Fair Value of Derivative Instruments
In millions Balance Sheet Classification 2015 2014
Asset Derivatives
Derivatives designated as hedges:
Commodities Other current assets $ 3 $ 4
Foreign currency Accounts and notes receivable – Other 5 25
Total derivatives designated as hedges $ 8 $ 29
Derivatives not designated as hedges:
Commodities Other current assets $ 4 $ 2
Foreign currency Accounts and notes receivable – Other 156 91
Total derivatives not designated as hedges $ 160 $ 93
Total asset derivatives $ 168 $ 122
Liability Derivatives
Derivatives designated as hedges:
Interest rates Accounts payable – Other $ 4 $ 12
Commodities Accounts payable – Other 28 58
Commodities Other noncurrent obligations 234 48
Foreign currency Accounts payable – Other 1 —
Total derivatives designated as hedges $ 267 $ 118
Derivatives not designated as hedges:
Commodities Accounts payable – Other $ — $ 2
Foreign currency Accounts payable – Other 83 161
Total derivatives not designated as hedges $ 83 $ 163
Total liability derivatives $ 350 $ 281
Foreign currency derivatives not designated as hedges are offset by foreign exchange gains or losses resulting from the
underlying exposures of foreign currency denominated assets and liabilities. The amount charged on a pretax basis related to
foreign currency derivatives not designated as a hedge, which is included in "Sundry income (expense) - net" in the
consolidated statements of income, was a loss of $318 million for 2015, loss of $333 million for 2014 and gain of $89 million
for 2013. See Note 13 for the net impact of foreign exchange transactions.